Caroline Herron v. Fannie Mae
861 F.3d 160
| D.C. Cir. | 2017Background
- Caroline Herron was an at-will contractor retained by Fannie Mae to consult on Treasury’s Making Home Affordable Program (MHAP), primarily the Home Affordable Modification Program (HAMP).
- Herron alleged Fannie Mae pushed "stated" trial modifications to increase incentive payments and executive bonuses despite low conversion rates to permanent modifications, and she disclosed these concerns to Fannie Mae and Treasury.
- Herron sought to become an embedded contractor at Treasury; Fannie Mae raised ethics/conflict concerns and ultimately rejected the move and terminated her contract shortly after she threatened escalation.
- Herron sued Fannie Mae and three officers asserting (a) claims under D.C. law for wrongful termination in violation of public policy, tortious interference, and civil conspiracy, and alternatively (b) a Bivens claim if Fannie Mae were a government actor.
- The district court dismissed the Bivens claim (holding Fannie Mae is a private entity despite conservatorship) and later granted summary judgment for defendants on the D.C. common-law claims; Herron appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fannie Mae is a "government actor" for constitutional (Bivens) purposes under Lebron | Lebron's three-factor test should treat Fannie Mae as a government actor because the FHFA conservatorship gives the government pervasive, long-term control | Fannie Mae is a private entity; FHFA conservatorship is temporary and does not create the permanent government control required by Lebron | Fannie Mae is not a government actor; conservatorship does not satisfy Lebron’s permanency requirement; Bivens claim dismissed |
| Whether EESA (and related statutes) establishes a public-policy basis to overcome the at-will employment doctrine | EESA’s purposes (prevent foreclosures, protect taxpayers) firmly anchor a public-policy exception protecting disclosures about HAMP mismanagement | EESA’s provisions state general purposes/goals and do not set a specific, enforceable standard of conduct to create a new public-policy exception | No public-policy exception under EESA; wrongful termination claim fails |
| Whether Herron stated a tortious interference with prospective contractual relations | Herron had reasonable expectancies: embedded Treasury position, other Fannie Mae work, and employment at Collingwood Group | (1) at-will relationships are not valid expectancies; (2) employer cannot interfere with its own prospective relations; (3) Collingwood expectancy was too remote | Summary judgment for defendants affirmed; Herron failed to establish a valid business expectancy |
| Whether civil conspiracy claim survives given failure of underlying torts | Herron contended individual liability or conspiracy could proceed despite summary judgment on other claims | Defendants argued conspiracy depends on a viable underlying tort and fails if none exists | Conspiracy claim dismissed/abandoned; affirmed because no cognizable underlying tort |
Key Cases Cited
- Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374 (U.S. 1995) (three-factor test for when a government-created corporation counts as part of the government)
- Bivens v. Six Unknown Named Agents, 403 U.S. 388 (U.S. 1971) (recognized implied damages remedy against federal officers for constitutional violations)
- Perry Capital LLC v. Mnuchin, 848 F.3d 1072 (D.C. Cir. 2017) (background on Fannie Mae and FHFA conservatorship)
- Meridian Invs., Inc. v. Fed. Home Loan Mortg. Corp., 855 F.3d 573 (4th Cir. 2017) (conservatorship control is temporary and does not convert FHFA/Fannie into permanent government actors)
- Liberatore v. Melville Corp., 168 F.3d 1326 (D.C. Cir. 1999) (explaining narrow public-policy exception to at-will employment)